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Terms in this set (34)
Delivery expense is a(n) ____.
The cost-of-goods-sold model is:
Beginning inventory, plus purchases, less ending inventory equals cost of goods sold.
If ending inventory is understated for Year 1, then in Year :
Cost of goods sold will be understated and gross profit will be overstated.
On August 1, Savage Company purchased $2200 of inventory on account with credit terms of 4/10, net 30. Savage Company uses the perpetual inventory system. On August 15, Savage Company paid the amount due. What journal entry did they prepare on August 15?
Debit Accounts Payable for $2,000 and credit Cash for $2,200
When comparing the FIFO and LIFO inventory methods:
FIFO matches old inventory cost against revenue
Under the ____ method, ending inventory is based on the costs of the most recent purcahses.
On May 1, Santelle Company purchased $700 of inventory on account with credit terms of 2/10, net 30. Santelle uses the perpetual inventory system. On May 2, the seller gave Santelle a $100 allowance due to a product defect. What journal entry did Santelle Company prepare on May 2?
Debit Accounts Payable for $100 and credit Inventory for $100
Kennel Company reported the following:
Cost of Goods Sold: $300,000
Ending Inventory: $95, 000
Beginning Inventory for the Period: $60,000
Based on this information, the purchases are:
Mariah Company has inventory at the end of the year with a historical cost of $95,000. Mariah Company Uses the perpetual inventory system. The current net realizable value is $75,600. The journal entry to record the adjustment to the lower of cost or market will be
Debit Cost of Goods Sold for $19,400 and Credit Inventory for $19,400.
When inventory costs are decreasing, the LIFO costing method will generally result in:
A higher gross profit than under FIFO
Under U.S. GAAP, inventories are reported on the balance sheet at:
Forever Jewelers uses the perpetual inventory system. On April 2, Forever sold merchandise with a cost of $4,500 for $7,000 to a customer on account with terms of 2/15, n/30. Which of the following journal entries correctly records the sales revenue?
Accounts Receivable 6,860
Sales Revenue 6,860
Grogan Company purchases inventory on account with a cost of $1,300 and a retail price of $2,600. Grogan Company uses the perpetual inventory method. What journal entry is required on the date of purchase?
Debit inventory for $1,300 and credit Accounts Payable $1,300
The following data are for Steve's Candy Store for January:
Beginning inventory: $191,000
Net Sales Revenue: $620,000
Net Purchases: $480,000
Normal Gross Profit Rate: 30%
What is the company's estimated ending inventory for the month?
The Sales Discount Forfeited account ____.
Represents the discount a customer loses when the customer does not pay within the discount period.
The following data are for Jesse's Candy Store for January:
Beginning Inventory: $205,000
Net Sales Revenue: $440,000
Net Purchases: $585,000
Normal Gross Profit Rate: 40%
What is the company's estimated cost of goods sold for the month?
Which of the following is a permanent account?
Both merchandise Inventory and Accounts Receivable
Which of the following is a temporary account?
Salaries and Wages Expense
A company purchased $1,800 of merchandise on December 5. On December 7, it returned $200 worth of that merchandise. On December 8, it paid the balance, taking a 2% discount. The amount of the cash paid on December 8 equals:
A company has net sales of $1,832,000, sales commissions in the amount of $194,000 net income was $366,400, and the gross profit ratio is 60%, what is the amount of cost of goods sold?
$732,800 (Net Sale / 60%)
A company's cost of goods sold was $4,000. Determine net purchases and ending inventory given goods available for sale were $11,000 and beginning inventory was $5,000.
Net purchases: $6,000; Ending Inventory $7,000
Trane Company purchased merchandise inventory with an invoice price of $4,000 and credit terms of 2/10, n/30. What is the net cost of the inventory if Trane Company pays within the discount period?
$3,920 ($4,000 - ($4,000 * 0.2))
On July 22, a company purchased merchandise inventory at a cost of $5,250 with credit terms 2/10, net 30. If the company pays for the purchase on August 7, what would be the appropriate journal entry on the payment date?
Accounts Payable $5,250
During a period of steadily rising costs, the inventory valuation methods that yields the lowest reported net income is:
The inventory valuation method that tends to smooth out erratic changes in costs is:
A company had inventory of 5 units at a cost of $20 each on November 1. On November 2, they purchased 10 units at $22 each. On November 6, they purchased 6 units at $25 each. On November 8, they sold 18 units for $54 each. Using LIFO perpetual inventory method, what was the cost of the 18 units sold?
A corporation uses a FIFO perpetual inventory system and has the following events occur during the reporting period:
August 2, 25 units were purchased at $12 per unit
August 5, 10 units were purchased at $13 per unit
August 15, 12 units were sold at $25 per unit
August 18, 15 units were purchased at $14 per unit
What was the dollar amount of the ending inventory for the month of August?
At the end of 2018, a $5,000 understatement was discovered in the amount of the 2018 ending inventory. What were the 2018 effects of the $5,000 inventory error if the error was not corrected?
Assets were understated by $5,000 and net income was understated by $5,500.
If the beginning inventory balance is understated:
Cost of goods sold will be understated and net income will be overstated.
Coleman Company has provided the following information: Beginning inventory, $100,000; cost of goods sold, $450,000; and ending inventory, $80,000. How much were Coleman's inventory purchases?
A company that uses a perpetual inventory system purchased inventory on account and later returned goods worth $800 to the vendor. Which of the following would be the correct journal entry to record these returns if the company has not yet paid the vendor?
Accounts payable 800
Merchandise inventory 800
A company that uses the perpetual inventory system purchased inventory for $950,000 on account with terms of 4/7, n/20. Which of the following correctly records the payment made 150 days after the date of the invoice?
Accounts Payable 950,000
Moore Company purchased an item for inventory that cost $20 per unit and was priced to sell at $30. It was determined that the replacement cost is $18 per unit. Using the lower of cost or market rule, what amount should be reported on the balance sheet for inventory?
Iris Company has provided the following information regarding two of its items of inventory at year-end:
There are 100 units of Item A, having cost of $20 per unit and a replacement cost of $18 per unit.
There are 50 units of Item B, having a cost of $50 per unit and a replacement cost of $55 per unit.
How much is the ending inventory using lower of cost or market on an item-by-item basis?
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